PB Fintech Ltd has two key businesses – Policybazaar and Paisabazaar 

Company overview 

• Launched in 2008, Policybazaar is a marketplace for buyers and sellers of insurance products with over 48 insurance agencies offering 390+ term, health, motor, home, and travel insurance products on their platform
• Paisabazaar is an independent digital lending platform that enables consumers to compare, choose and apply for personal credit products (think: personal loans, business loans, credit cards, home loans & LAP) offered by banks, NBFCs, etc.
  • The unique base of 22.5 million customers, who have accessed their credit score through Paisabazaar 

Key highlights 

Policybazaar 

• In FY20, Policybazaar was India’s largest digital insurance marketplace among all web aggregators with a 93.4% market share (basis number of policies sold), and a dominant player in online insurance distribution (~65% share) 
• The company originated premium of INR 27.4Bn from new insurance policies, touching INR 47 Bn including renewals for FY21 (~42% of total originated premiums for the online space) 

Paisabazaar

• Paisabazaar is India’s largest digital consumer credit marketplace with a 53.7% market share (based on disbursals) in FY21 
• ~40% of the disbursals in the last three years have been to customers acquired through their free credit score utility model, with the company offering more personalized and accurate product recommendations to consumers, using analytics and integrations with lending partners 

Interesting! What about financials & use of proceeds? (Great q broo) 

• The company has recorded Total Premium growth of ~63% and 25% for FY20 and FY21, while total disbursals to existing customers also inching up YoY (increasing signs of customer retention)
• Revenue from operations (across business lines) was up 15% YoY to INR 886 crores for FY21, with the company considerable reducing losses as well (down to INR 150 from ~INR 300 crores);
• Q1FY22 numbers seem to give little away in terms of what to expect, with loss doubling on a YoY basis (Q1FY21 vs Q1FY22) 
• The company will utilize net proceeds from fresh issues for enhancing visibility and awareness of its brands (Rs 1,500 crore), new opportunities to expand consumer base including offline presence (Rs 375 crore), strategic investments and acquisitions (Rs 600 crore), and expanding presence outside India (Rs 375 crore)

Valuations? 

• Lack of comparable company (locally), make valuing PB FinTech (with its varied business lines) a tough ask, especially given the heavily regulated space its a part of 
• When compared to the other listed tech play, the company appears to be at a similar valuation, with Zomato current valued at 50x Operating Revenue (FY21), and PB FinTech aiming to list at similar levels (on the higher end of the Price Range) 

Final thoughts?

• PB Fintech is a strong brand and high growth business model operating in business segments with a strong industry tailwind, coupled with high barriers to entry (listing insurers, policies, and loan products)
• Further, being first to market, while commanding a high market share make the company demand a valuation premium to other listed players (irrespective of shortcomings in financials) 
• Insurance & Financial Services, are broad segments that are poised to grow in the near term, with digital acquisitions likely to intensify going forward; PB FinTech, with a ready base of partners listed on their platforms, are best prepared to ride the growth journey
• As a show of faith, the Promoter Group have re-jigged the % of shareholding they wished to offload, re-affirming their stance on the longer-term growth expectations from the business 

More about the IPO:

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